Almost Done: Buying a House with NACA

Arguably one of the best things about buying a home through NACA is the below-market interest rate, which members must lock in before they purchase their home. Before submitting the mortgage application, NACA members can further reduce the interest rate by putting additional funds down. For each 1 percent of the mortgage that is paid up front, the member receives a 0.25 percent reduction in the interest rate [source: NACA]. There's no limit -- you could buy down the interest to zero percent.

Next, members apply for NACA Credit Access, which involves updating financial documents by submitting any updated W-2s, paystubs and bank statements. This step is basically another check that the member is financially ready to buy a home. Most of the issues that are being screened for here are things that should have been resolved during the initial process of becoming qualified with NACA. Members can apply for NACA Credit Access as they secure the mortgage loan from a participating lender. NACA partners with banks that provide the loans; NACA Credit Access is the stamp of approval that makes it very likely that the lender will approve the loan.

When everything's approved, there's a traditional house closing at a NACA office. The buyer pays no closing costs and leaves with the keys to his or her new home. The process to buying a home with NACA can be long, but if members stick with the program, they eventually become homeowners.

Involvement with NACA doesn't end with move-in, though. NACA supports homeowners through the life of their loan with the Membership Assistance Program, which we mentioned earlier. Counselors help members deal with the costs of being a homeowner and reconfigure budgets to address spending issues. If someone does fall on hard times, he or she can apply for help through the Neighborhood Stabilization Fund. The fund provides up to three months of mortgage payments, provided the member makes some sort of matching contribution [source: NACA].

NACA also organizes its members into Neighborhood Stabilization Committees (NSC), another investment in neighborhoods. The goal of these committees is to create local activists that will address issues such as violence, drug activity, abandoned property and the school system in the area and help revitalize communities.

To learn about NACA's other advocacy efforts and why the CEO is referred to as a "bank terrorist," go on to the next page.

How do NACA mortgages compare?

NACA does not make its performance data public, so there's little evidence as to whether these homeowners are successful in taking advantage of the opportunity given to them by NACA. Some suspect that the lack of data suggests that NACA is hiding some bad numbers, but NACA CEO Bruce Marks argues that these indicators don't matter [source: Talcott].

In 2007, though, Marks released a few numbers to the Boston Globe. About 1.15 percent of NACA mortgages were marked as "seriously delinquent" (meant to denote a payment that's at least 90 days late) while the national rate was 2.95 percent at the time. This national rate composes both subprime loans, which had a rate of 11.38 percent serious delinquency, and prime loans, which had a rate of 1.31 percent [source: Swidey]. At the same time, NACA noted that about 6.3 percent of NACA members had used the Neighborhood Stabilization Fund [source: Swidey].